Payday loan reform - Behind the Bucks: 48 First Alert Investigat - WAFF-TV: News, Weather and Sports for Huntsville, AL

48 First Alert Investigation

Payday loan reform - Behind the Bucks: 48 First Alert Investigation

Payday loan industry officials respond to accusations of industry preying on people. (Source: WAFF) Payday loan industry officials respond to accusations of industry preying on people. (Source: WAFF)
ALABAMA (WAFF) -

Drive through any city in Alabama and you'll see more than your share of payday loan businesses.

Critics say these companies prey on the poor with sky-high interest rates, but efforts by a North Alabama lawmaker tried to pass new reforms this year. The bill fell flat during the last session. So we investigated and to dig into campaign contributions made by the industry.

The payday loan industry is huge. According to a Yahoo! finance article they take in $46 billion nationwide.   So is it modern day loan sharking or providing a service that others overlook? That depends on how you ask.

“I think the people are badly informed," said Roy Hutcheson, president of Hutcheson Enterprises, after being asked about people calling the industry predatory lending.  

Hutcheson's company oversees around 320 payday and title loan businesses nationwide. His 81 stores are in the state of Alabama.

"Hardly anyone has any reserve savings so if something unexpected happens, they need to borrow that money," said Hutcheson.  

And he’s correct about that. A recent survey released by the Federal Reserve System declared 47 percent of people polled - nearly 1 out of every 2 - are unable to cover a $400 emergency. Hutcheson said his stores help fill a need and people have the wrong idea about what title and payday loan companies are all about.

"If you could go sit in one of our stores, see the reception that the customers get, the feelings the customers have about the industry, you'd have a totally different perspective about the industry,” said Hutcheson.

And we took him up on that offer and went to C&R Title Pawn on Memorial Parkway in North Huntsville. 

"My customers are my family," said Donna Roberts. Roberts is the store manager and during my visit to her store I had a chance to meet some of her family.

"There's a lot of people that don't have family to go to, they can't go to the bank. They have nowhere else to turn," said Roberts.

Three customers stopped in. Two declined an on-camera interview, but Roebeauty Fletcher spoke to me about why she uses as service that receives so much negative attention.

"As far as I can see they're the only ones that give me the service I need and don't complain," said Fletcher.

President Obama took his turn criticizing the payday loan industry during a visit to Birmingham last March and announced a plan for more oversight. 

"Every year, millions of Americans take out these payday loans. Here in Alabama there are four times as many payday lending stores than there are McDonald's. Think about that. Cause there are a lot of McDonald's," said President Obama.

And then this legislative session, state lawmakers proposed new reforms based on what the state of Colorado had recently done. Their state leaders changed the law extending the term or months the loan could be paid back and made it so that the borrower was paying off a portion of the principal with each payment.

"Effectively you can let the industry survive and continue to give risky loans in this space but also lower the rates to the borrower, and that's what we were attempting to do," said State Senator Arthur Orr.  

Orr is one of the loudest voices for reform. His legislation passed through the Senate, but when the bill hit the Alabama House it died in committee.

"The industry is very organized and very effective in the legislative process," said Orr.

What he means is they're a powerful lobby.

We did some digging on FollowTheMoney.org. They’re a nonpartisan group who tracks political campaign contributions. According to their database, since the mid-90s, the payday title Loan lobby has donated more than $730,000 through more than a thousand donations. And those numbers don't include 2015 or 2016, because they're not available yet. Orr didn't want to question that but he did raise some concerns about the

Orr didn't want to question that but he did raise some concerns about the rates that Alabamians are paying compared to some of our neighbors.

"Why does Tennessee have about a 15 percent  lower cost for the same type of loan up in Tennessee then Alabama? Why is Mississippi's 40 percent less in cost and Florida's less in cost about 40 percent then Alabama?” said Orr.

We asked Hutcheson about those campaign contribution numbers.

"I have a really hard time believe that there was that much money plowed into Alabama even over the last five years," said Hutcheson.

He added if Alabama lawmakers had passed the reforms, then he thinks the state would see a significant decline in the number of payday loan businesses based on what history has shown out West.

"Colorado's industry went down to about 25 percent of what it was before the bill went in," said Hutcheson.

And he said this attack on his bottom line needs to stop because he's not hurting the community, he's helping it.

"There are many many reputable university studies as well as the Federal Reserve Bank of New York  about the industry and states that have restricted it or outlawed it, being Georgia and North Carolina primarily, and in every case bankruptcy's go up, foreclosures go up," said Hutcheson.

We asked Hutcheson about his donations to political campaigns. He said he didn't donate in 2015 or 2016 because he didn't feel like he needed to. To see if your local lawmaker took any money from the payday loan groups you can click here. Senator Orr plans to bring the same legislation to Montgomery next session.

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